Deliberate Deprivation of Capital

A Local Authority of the Department for Work and Pensions can take into consideration assets which they deem you have deliberately deprived yourself of.

If you are already in receipt of local authority funded care or means tested benefits or are likely to require assistance in the future then an asset which you dispose of may be taken into consideration as if it was still owned by you when assessing your entitlement to assistance. A disposal could include:

• A gift (or a sale at an undervalue)of cash or property;
• A variation of an inheritance;
• Moving assets into a type of asset that would not be subject to assessment; and
• Unexplained spending on assets that do not hold value or gambling.

There is no set time frame after which a disposal will not be considered a deliberate deprivation but whether or not it would be classed as deliberate depends upon the facts and motivation for the disposal.

Factors that are considered when determining whether a deliberate deprivation of capital has occurred include:

• If minimising your assets in advance of a potential assessment for assistance was a significant motivation (not necessarily the only or principal motivation);
•  If there was a reasonable expectation that you would require means tested assistance; and
• If there was a reasonable expectation that you would have to contribute, whether that be a complete ineligibility to assistance or only be entitled to partial assistance.

The capital thresholds for care and benefits vary so it is important that you check the specific rules for any benefits you are or are likely to be receiving.

It is also worth considering this before leaving money to a beneficiary in receipt of means tested assistance under a Will as a direct legacy could jeopardise their entitlement to assistance. Instead leaving to a trust for that person’s benefit may be more appropriate.

If you would like to discuss deliberate deprivation or protecting the legacy of a beneficiary further please contact a member of our expert Wills Trusts and Probate team on 01202 525333.